29 November 2001
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The UC Board of Regents has approved a basic budget proposal of $3.65 billion for the 2002-03 fiscal year, but it is likely that Gov. Gray Davis will ask that it be cut by as much as 15 percent due to the state’s economic downturn.

The budget proposal, which represents an 8.7 percent increase over this year’s budget, was presented by UC Vice President for Budget Larry Hershman at the Nov. 15 regents meeting in San Francisco.

“The next couple of years are going to be tough,” he told the regents. The state Legislative Analyst’s Office is projecting a state shortfall of as much as $12.4 billion by fiscal year 2002-03, which has UC budget analysts searching for ways to trim costs while maintaining quality educational programs and keeping faculty and staff salaries as competitive as possible. If the projected shortfall comes to pass, it would signal California’s sharpest one-year decline since World War II.

“It is disappointing to begin considering budget cuts at the university at a time when we are really just beginning to recover from the sharp cuts of the early 1990s,” Hershman said. “However, we know the state is facing a serious fiscal situation, and we are committed to playing a part in the solution. We will do all that we can while preserving the quality of our core educational programs as much as possible.”

The regents are examining several hotly contested options for reducing the budget if major cuts are requested, including raising tuition and fees, limiting enrollment and cutting programs. No decisions have been made yet, but the board’s discussions will help inform Davis administration decision-makers as the governor prepares to unveil his proposed 2002-03 state budget in January.

“Given the reality of the state’s fiscal situation, we will have difficult choices to make in the year ahead,” UC President Richard Atkinson told the regents.

“We must ensure that choices made in the near term are consistent with the goals we have set for the long term, and the most important of these goals is to maintain the quality and vitality of the university,” he said.

The governor has already asked UC to cut $86 million from the current year’s UC budget. Despite these mid-year cuts, and the likely request for additional cuts in 2002-03, the budget proposal covers funding for the university’s core needs, Hershman said. Additionally, it emphasizes that when the economy recovers, UC will seek funding for items that cannot be supported now.

The 2002-03 UC systemwide budget proposal includes the following: • Funding to keep faculty and staff compensation as competitive as possible, including a 2 percent average general salary increase, merit increases averaging approximately 1.5 percent for eligible faculty and staff, and an additional 2 percent increase in the faculty and staff salary pool, to be distributed to employees in positions where compensation lags behind the market. (Salary increases are subject to collective bargaining requirements.)

• A 10 percent increase in funds to help cover the rising cost of providing health insurance to employees.

• Funding for enrollment growth of 7,100 full-time equivalent students in 2002-03, a 4.3 percent increase over 2001-02, to maintain the university’s commitment to offer a place to all students who meet its eligibility requirements.

• An assumption that the state will continue to provide state funding to avoid student fee increases. Depending on the severity of the budget cuts necessary in 2002-03, UC may be forced to reexamine this practice.

• A 4 percent increase in nonresident tuition ($428), consistent with state policy that ties tuition for out-of-state students to the cost of instruction and to nonresident charges at UC’s comparison institutions.

• Funding to continue phasing in state support for summer instruction. This is a candidate, however, for future budget cuts.

• Funding to continue strengthening the quality of the undergraduate instructional program, provide expanded support for graduate education, and continue a multi-year program addressing ongoing budget shortfalls in building maintenance, instructional technology and library materials.

If the state calls for further budget cuts, one of the most likely candidates to cut will be state-subsidized summer school programs, Hershman said. UC has asked for $33 million to expand those programs to every campus and help accommodate increasing numbers of students. (Berkeley and UCLA already receive state funds to run summer school programs.)

Another option would be to reduce the size of the entering freshman class and send some of the accepted students to community colleges for two years, he said. Or the university may have to implement student fee increases for the first time in seven years.